NYC Health + Hospitals loses $776M in first half

New York moves up in national health rankings

New York came in No. 12 in the country in health system performance, moving up from No. 20, according to the latest rankings from The Commonwealth Fund.

The report released Wednesday compares health access and quality measures between 2012 and 2014 or 2013 and 2015 depending on the data source.

The state, which entered the top quartile for the first time, was among those that showed some of the most improvement. It saw gains on eight of 15 prevention and treatment measures, and it jumped from No. 10 to No. 6 in health care equity rankings, which took into account income and ethnicity.

However, New York only improved on two of five measures in access and affordability. Notably, the share of adults who went without care because of cost over the course of a year dropped from 15% in 2013 to 12% in 2015.

The report intentionally emphasized that states that expanded Medicaid access under the Affordable Care Act showed stronger progress than states that did not.

"That puts the onus on people who would change the current law to be sure that the proposals they're making will maintain or accelerate that progress," said Dr. David Blumenthal, president of the fund, in a call with reporters Wednesday. The interactive report is available here, and a PDF of state-specific data is available here.—C.L.

WMC to convert prisoner beds for neonatal, maternity care

Westchester Medical Center in Valhalla, N.Y., hasn't taken care of a prisoner in more than two years, although 14 of its beds are still certified for that purpose.

Now the 652-bed medical center is asking the state's permission to convert eight prisoner beds to neonatal intensive care beds.

Demand for neonatal beds is exceeding the facility's capacity, WMC said. And it soon plans to seek permission to convert the remaining six beds to inpatient maternity care, according to its certificate-of-need filing with the state Department of Health.

The medical center had already demolished its prisoner unit to make way for an Ebola unit with state approval.

Last year the neonatal unit, which includes 14 intermediate care beds, had an occupancy rate of 103.4%; in 2015 it was 107.8%. In September 2016 the Health Department directed WMC to reduce its patient census or apply to increase its neonatal bed capacity.

The certificate-of-need application also asks for state approval to renovate space on the second floor of WMC's Maria Fareri Children's Hospital to accommodate the eight neonatal intensive care beds. The $3.3 million project will be financed through the medical center's existing equity, according to the application. —R.S.

Empire: Our drugs costs are going up

Empire BlueCross BlueShield said it spent more on prescription drug costs for its commercial members in 2016 than 2015. Empire was responding to a Crain's analysis that found some insurers spending less on prescriptions, even as they enlist elected leaders in their fight against the pharmaceutical industry over drug costs.

That article noted other insurers, including Empire, where spending fell faster than membership losses. But a spokeswoman for Empire said Crain's findings, based on financial statements the insurer filed with regulators, don't account for certain changes in membership across different service lines.

The membership numbers Crain's examined include Empire customers who purchased vision, dental and, in a few cases, stop-loss insurance. After removing those customers, Empire membership fell faster, at 17.8%, than its decline in drug costs of 10.4%.

A spokeswoman for Empire attributed the overall reduction in drug costs to a drop in Medicare members, who tend to spend more on drugs than commercial members. For its commercial customers with drug coverage, pharmacy costs rose 13.6% in 2016, a faster clip than the 11.9% increase in 2015. Empire's explanation does not follow the trend observed by Crain's using financial data from EmblemHealth's HIP and GHI plans and CareConnect. An Empire spokeswoman did not immediately respond to Crain's questions regarding the insurer's financial statements before the March 5 publication of its article.—J.L.

AT A GLANCE

BUDGET MATRIX: The Greater New York Hospital Association has created a handy matrix showing the respective positions of the Assembly, Senate and GNYHA on a range of executive budget proposals related to health care.

WHITHER MEDICARE: The New York State Health Foundation plans to hold a talk March 28 on the future of Medicare with Sean Cavanaugh, former deputy administrator and director of the Center for Medicare at CMS. The deadline to RSVP for the Manhattan event is March 22.

NYC Health & Hospitals loses $776M in first half

New York City Health + Hospitals reported a $776 million operating loss for the first half of fiscal 2017, according to unaudited financial statements.

The public health system's operating loss widened by 84.5% over 2015, when the system lost $420.4 million. After investment losses and interest expenses, the system lost $842.6 million.

The city paid the health system $78.8 million in capital contributions, resulting in a $763 million net loss. Enrollment in MetroPlus, its insurance arm, showed modest gains. But the system's goal of increasing the number of patients it serves is in jeopardy following declines in utilization at its hospitals and outpatient clinics, Crain's reported in January.

The results aren't directly comparable to estimates prepared as part of Mayor Bill de Blasio's turnaround plan for H+H. But expenses are growing faster than revenue—a bad sign for the system's finances, said Charles Brecher, director of research at the Citizens Budget Commission. "That's not how you close budget gaps," he said.

A spokesman for H+H downplayed the financial loss, citing the timing of government payments and accounting rules that count noncash costs, such as depreciation. The spokesman added that the system is still on track to reduce the budget gap by $770 million for the current fiscal year by increasing revenues and lowering costs. Of its operating loss, $200 million is the result of the city making a prepayment toward its fiscal 2017 subsidy to H+H last fiscal year. He said another $270 million were "noncash costs that do not impact system operations," such as depreciation and the noncurrent portion of pensions and post-employment benefits.

The system's financial situation will also improve as supplemental Medicaid payments, such as Disproportionate Share Hospital payments, become available later this year and it begins to realize savings on employees it has eliminated through attrition, the spokesman said. "Our headcount reduction through attrition is yielding results, which are cumulative and will therefore show much greater benefit in the second half of the fiscal year," he said.

Stanley Brezenoff, interim chief executive, will appear before the City Council's health committee March 20 to offer his testimony on the health system's finances and answer questions from members.

Operating revenues increased 2.1%, to $4.2 billion, including an 11.1% increase in premium revenue from MetroPlus, which Brecher, the fiscal watchdog, described as "modest" progress.

Increasing enrollment in the health plan is a major pillar of de Blasio's turnaround plan—and one of its only viable options due to the mayor's staunch opposition to clinical staff layoffs, service-line cuts and hospital closures.

Operating expenses rose 9.8%, to $4.9 billion, as spending on nonlabor costs, such as supplies, equipment and drugs, increased 11.1%, to $1.9 billion. Meanwhile spending on salaries and wages rose 3.9% despite efforts to lower costs through attrition and the cutting of administrative jobs.

De Blasio increased support for H+H by 10.9%, to $766.8 million, for fiscal 2018, which begins July 1, Crain's reported in Pulse Extra in January. That total represents cash support but does not include spending to cover the health system's debt service, medical malpractice claims and employee health insurance costs. When accounting for those expenses, as well as the city's share of supplemental Medicaid payments, the city's support for H+H could reach $1.9 billion next fiscal year, according to a June Independent Budget Office report.—J.L.

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